Shopify CEO calls on federal government to abandon tax plan for stock options

MONTREAL—The CEO of one of Canada’s up-and-coming tech companies is calling on the federal government to abandon its plan to expand taxation of stock options, saying the move will make it more difficult for startup firms to attract talent.

Tobi Lutke said the Liberal proposal would have it more difficult to launch his Ottawa-based e-commerce company, Shopify.

“I think the Liberals should abandon this because it fosters innovation,” the 35-year-old entrepreneur said in an interview Thursday.

“It would have been harder to build Shopfiy with the taxation being the way that it’s proposed,” he said in an interview.

During last year’s federal election campaign, the Liberals promised to cap how much can be claimed through stock option deductions. The party said employees with up to $100,000 in annual gains would be unaffected, a move it said would protect startups.

Finance Minister Bill Morneau recently said he will soon release details about the commitment. The government is expected to release its first budget in mid-March.

Lutke said the government promised during meetings with senior ministers and other officials to grandfather existing options.

He said many people took massive pay cuts to join his company several years ago in exchange for options to purchase equity. While the business is now mature enough to survive the changes, Lutke said it could have a disastrous impact on younger startups.